saveyourassetsfirst3 |
- Platinum: Fragility of supply Highlights Need for Global Diversification
- The Simple And Powerful Bull Case For Caterpillar
- 3 Mining Companies With Insider Buying This Month
- Will QE 3 Really Damage The U.S. Dollar?
- The Trouble With Quantitative Easing
- Central Bank Stimulus Boosts Gold ETF Outlook
- Overlooked Palladium ETF PALL: Another Way To Ride Metal-Friendly QE3
- TheDailyGold Comments on Macro Drivers & Gold, Silver, Miners
- Brazilian Gold Commences Phase Two Drill Program on the Batistão Project
- Richard W. Fisher - Remarks before the Harvard Club of New York City
- Risk Of October Correction In Gold and Silver As Seasonally Weak
- Gold and the harsh realities of a 42 year old currency experiment
- Silver Update: Silver Substitutes 9.24.12
- Quadrillion Dollar Derivatives Market 20 Times Global GDP
- Risk of October Correction in Gold and Silver
- Bullion Prices 'Should Break Higher After Consolidation'
- Gold Daily and Silver Weekly Charts – End of Quarter
- Turk – There Is A War Going On In The Gold & Silver Markets
- Art Heist – DoubleLine Fund Manager Jeffrey Gundlach Robbed by the Hard Asset Focused
- Open-ended Rally in Gold, Silver and Stocks?
- Bernanke Declares War on Canadian Economy (Rest of the World Too)
- Don’t Miss the Big Show in Silver
- Gold replaces coca for Colombian mafia
- Selling This Week
- Ted Butler Urges JPMorganChase Board Members to Try Transparency in Silver
- Gold and Silver Market morning, September 25 2012
| Platinum: Fragility of supply Highlights Need for Global Diversification Posted: 25 Sep 2012 12:00 PM PDT This article is from Prophecy Platinum, posted with permission By: Leo Liu Sept 25, 2012 Platinum undersupply expected, price to rally to high level Bloomberg News point recently pointed out that this month platinum prices rallied to their highest level since February amidst violent labour conflicts at South Africa's Lonmin Plc's (LON) Marikana mine – which accounts for about 10 percent of global output – and the U.S. central bank's announcement of a third (and perpetual) round of quantitative easing. And now, per the Globe and Mail, "the industrial strife hitting South Africa's mining industry has spread to AngloGold Ashanti, the world's third-largest bullion producer by sales." Figure 1. One year platinum spot price  Source: Kitco Because of the upheaval associated with the industry's wildcat strikes and the increasing demand for platinum, there are now fears of undersupply where surpluses had been predicted. Analysts expect the platinum market to go into a deficit in 2013 and platinum prices are forecasted to rise to over US$2,000 per ounce by 2015, potentially higher if South Africa deteriorates further. In the long run, the market is expected to remain in deficit and such supply-side constraints would only lead to further tightening, according to KPMG Platinum Insight. Figure 2. Platinum market balance and consensus price  Inflation hedge drives the investment demand for platinum Figure 3. Platinum ETFs Total Metal Holdings ('000 oz)  Source: Mitsui and Co. Precious Metals, Inc. From the macroeconomic perspective, the now well-established global trend of loose monetary policy has become very apparent. The U.S. Federal Reserve on Sept. 13 announced a third round of quantitative easing (QE3) in an effort to stimulate growth – with an unlimited horizon of both time and amount. Further, the European Union is set to fire up the printing press in an effort to avoid a debt crisis, the Japanese government suddenly announced an injection of 10 trillion yen to stimulate the economy, and China has launched an infrastructure stimulus plan of 1 trillion yuan. Such policies may temporarily stimulate an economy, but will dramatically accelerate global inflation and corresponding value of currencies. Auto catalyst demand will increase lead by light duty vehicle production Figure 4. Global auto catalyst demand for platinum  Source: Thomson Reuters GFMS, IHS Automotive Current data shows the vehicle sales growth rate in China and Europe is stabilizing. Figure 5. Global vehicle sale growth rate (%)  Source: Bloomberg With close association to economic recovery and future growth, global vehicle production is expected to increase moving forward and platinum group metals (PGM) demand will be in line with such upward trend. Figure 6.The global vehicle production and PGM demand forecast  Source: Stillwater Supply at risk
Figure 7. Platinum supply breakdown by regions  Source: Johnson Matthey Platinum 2012
Figure 8. South Africa platinum group metal (PGM) production index  Source: Data stream
South African PGM industry is incurring loss due to high cash costs Despite the benefit of a strong rise in platinum price in the middle of September, over half of platinum production is still not recovering all-in cost (cash cost + capex). This fact will likely slow mine expansions and commissioning of new mines and may even lead to further curbing of production. Figure 9. World platinum equivalent total Cash cost and All in Cost 2011  Source: Thomson Reuters GFMS (Platinum & Palladium Survey 2012) A substantial proportion of the South African PGM industry is incurring loss due to high cash costs and sustaining capital expenditure. As KPMG point out:
Canadian mining properties becoming a very attractive opportunity Stillwater Mining and are the North American primary PGM (Platinum Group Metals) producers. The Most of the platinum group metals produced in Canada are by-products of nickel mining. The Sudbury Basin in central Ontario has the largest number of PGM-producing mines, while Yukon and Quebec also have huge PGM resources. Located in Canada's Yukon Territory, ranked in the Top 10 of global mining jurisdictions by the Fraser Institute, the Wellgreen Nickel-Copper-PGM deposit owned by Prophecy Platinum is an excellent example of project in a safe jurisdiction with blue sky potential that international platinum investors and producers alike should and will come to take notice of in the coming months and years. Written by: Leo Liu, MBA, CFA | lliu@prophecyplat.com Edited by: Chris Ackerman, BA, LLB | cackerman@prophecyplat.com Leo Liu is a private investor and currently holds the position of Investor Relations Officer with Prophecy Coal Corp. (TSX: PCY) and Prophecy Platinum Corp. (TSX.V: NKL).
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Prophecy Platinum Corp. Neither Prophecy Platinum Corp. nor the author can guarantee accuracy of all information provided. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Prophecy Platinum Corp. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication
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| The Simple And Powerful Bull Case For Caterpillar Posted: 25 Sep 2012 11:00 AM PDT By Vince Martin: Dow component Caterpillar (CAT) is bringing up the rear in trading Tuesday, down 3% as of this writing after lowering its guidance for 2015 from $15-$20 per share to $12-18 per share. With pullbacks in capital expenditures among struggling mining companies, and Caterpillar CEO Doug Oberhelman projecting "anemic" worldwide economic growth, the lowered forecast should have been no surprise. Indeed, it's clear that the move wasn't a complete surprise; Caterpillar lowered its 2015 earnings target by 14.3% at the midpoint, yet the stock fell just four percent, counting a one percent dip in late-afternoon trading yesterday. Clearly, investors had been expecting some kind of cut in future expected earnings. But even the small drop in share price, to $88.14 as of 1 pm Eastern, has opened up a large buying opportunity in Caterpillar shares. The math is very simple. Caterpillar is currently trading at about 9.2x forward earnings (the Bloomberg Complete Story » | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 Mining Companies With Insider Buying This Month Posted: 25 Sep 2012 10:55 AM PDT By Markus Aarnio: Gold prices are up 10% and silver prices are up 25% since the beginning of August 2012. Based on this observation I decided to screen some mining companies to see if there was any insider buying this month. I focused my search on gold and silver miners. I only found two gold and silver miners and one molybdenum mineral mining company. Here is a look at the three companies: 1. Coeur d'Alene Mines Corporation (CDE) is the largest U.S.-based primary silver producer and a growing gold producer. The company has three new, large precious metals mines generating significantly higher production, sales and cash flow in continued strong metals markets. In 2011, Coeur realized the first full year of production and cash flow from all three of its new, 100%-owned mines: the San Bartolomé silver mine in Bolivia, the Palmarejo silver-gold mine in Mexico, and the Kensington gold mine in Alaska. Complete Story » | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Will QE 3 Really Damage The U.S. Dollar? Posted: 25 Sep 2012 10:53 AM PDT By Ralph Shell: When the Fed announced last week they were going to resume the expansion of their balance sheet with another edition of QE, traders immediate reaction was to sell the USD and buy commodities. Positions were assumed accordingly, but we wonder if this analysis might be too simplistic. Yesterday in The Telegraph, Ambrose Evans-Pritchard had some insightful analysis. It is his contention that Bernanke contributed to the severity of the recession when he: "...kept policy far too tight after the U.S. economy buckled in early to mid 2008. He allowed a collapse in the money supply to run unchecked, causing avoidable disasters at Fannie, Freddie, Lehman, and AIG later that year." Now, with the U.S. economy slowing, the labor market contracting, and fear of the pending "fiscal cliff," Bernanke is using one of his few remaining tools. The public perceives this will be an increase in the money supply, but what Complete Story » | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Trouble With Quantitative Easing Posted: 25 Sep 2012 10:49 AM PDT By John Lombardo: Theoretically, Fed asset purchases, known as quantitative easing, are supposed to stimulate economic activity through bank lending. While the Fed can grease the skids of money supply, it's really fractional reserve banking that drives money creation (see "The Fed, the Banks, Money Creation, Inflation, and the Bond Market," February 21, 2011). That is because for every dollar the Fed creates, the banking system can create multiple dollars. In short, if central bank monetary easing is to stimulate economic activity, banks must increase lending. Banking is a spread business, i.e. banks borrow money and lend it back out at higher rates, earning the difference, or the spread, between their borrowing and lending rates. Generally speaking, the maturity of bank borrowing (checking and Complete Story » | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Central Bank Stimulus Boosts Gold ETF Outlook Posted: 25 Sep 2012 10:08 AM PDT By Tom Lydon: Gold focused investments and exchange traded funds have rallied on more easing measures from central banks. The Federal Reserve, European Central Bank and Bank of Japan have all announced additional stimulus in the past month with moves that could weaken their currencies. Policies that devalue currencies are another reason to consider a physically-backed precious metal ETF. "The greatest boon for gold investors has been the rise of gold bullion exchange-traded funds. Suddenly, trading in gold has become cheaper, simpler and more liquid. No more filling out forms in triplicate and being escorted to the vault to collect your bars of gold. True, ETFs don't feel as nice as a bar of the good stuff, but then what do feelings have to do with being a rational investor? " Vikash Jain wrote for Financial Post. Some investors use gold ETFs to protect themselves from a weaker dollar and the Fed recently Complete Story » | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Overlooked Palladium ETF PALL: Another Way To Ride Metal-Friendly QE3 Posted: 25 Sep 2012 10:03 AM PDT By Hard Assets Investor: By Paul Baiocchi With all the talk about gold these days, it's easy to forget about palladium. Gold and silver seem to attract all the attention in this precious metals bull market, but the oft-overlooked ETFS Palladium ETF (NYSEArca: PALL) has been quietly moving higher as well. In some ways, palladium is the Theodore Roosevelt to gold's Franklin Delano Roosevelt. The less-publicized and underappreciated precious metal has been a rock star over the past month, slightly underperforming gold over that period. Clearly, investors expecting another round of pushing on the string—or QE3, or whatever the Federal Reserve is calling it these days—were buying not just gold but palladium, and in droves. For whatever reason, that has not led to any meaningful uptake in new PALL assets. In fact, the fund saw outflows of just under $1 million of its current $528 million asset tally in the past month even as Complete Story » | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TheDailyGold Comments on Macro Drivers & Gold, Silver, Miners Posted: 25 Sep 2012 09:07 AM PDT We discuss Gold, Silver, the miners and some macro…
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| Brazilian Gold Commences Phase Two Drill Program on the Batistão Project Posted: 25 Sep 2012 08:19 AM PDT Vancouver, BC, September 25, 2012 -- Further to its successful Phase One drill program (News Release 12/12, May 30, 2012), Brazilian Gold Corporation (TSXV: BGC) is pleased to announce the start of the Phase Two drill program on its wholly owned Batistão project located approximately 30 km southwest of the town of Peixoto de Azevedo in Brazil's northern Mato Grosso state. This region was the focus of a gold rush in the 1980's where 5 million ounces of unofficial production, mostly from shallow alluvial and laterite workings, is reported to have taken place. The region benefits from excellent infrastructure including road access, electrical power and the availability of a local skilled workforce. Ian Stalker, CEO of Brazilian Gold, commented "We are delighted the Phase One drill program confirmed the results of the historic drilling on the Batistão project and contingent on the results of the Phase Two program expect to be in a position to complete an initial resource estimate on this deposit soon after the drill program is completed. Resources from this project will add to the two gold discoveries (Jau deposit - Surubim project and VG1 deposit - Boa Vista project) by Brazilian Gold and subsequent resource estimates, as well as the expansion and upgrading of gold resources on the Company's flagship São Jorge project in 2011. In a relatively short time period, the Company has increased its global gold resource ounces by 114% and indicated resource ounces by 43%." Batistão Phase Two Program
The Batistão target was previously explored by a major Australian mining company from 1992 to 1995. The gold mineralization was discovered during a regional stream sediment program and was delineated by soil sampling, geophysics, auger drilling (109 holes in 762 m) and short reverse circulation (RC) drill holes (24 holes in 1,287 m). The program outlined a west to northwest trending gold-in-soil anomaly that is over 2,000 m in length. Short RC holes tested 500 m of this strike length to a depth of approximately 50 m; the mineralized zone is up to 30 m thick and is open in all directions. Gold mineralization is associated with sericite-silica-sulphide altered granitic rocks; sulphide minerals include pyrite (<5%) and minor chalcopyrite. Garnet Dawson, M.Sc., P.Geo. (British Columbia), Vice President, Exploration for the Company and a Qualified Person, as defined by National Instrument 43-101, has reviewed and approved the technical disclosure contained in this News Release. About Brazilian Gold Corporation Brazilian Gold is a Canadian-based public company with a focus on the acquisition, exploration and development of gold properties located in northern Brazil. The Company has title to one of the largest mineral exploration land packages (3,753 km2) in the Tapajós and adjacent Alta Floresta gold provinces. The land package contains green fields to more advance stage projects including the Company's flagship São Jorge project. Rapid improvements to regional infrastructure continue to provide underlying support to Brazilian Gold's activities in northern Brazil. Resource Inventory Brazilian Gold has a resource inventory of 541,000 ounces of gold grading 1.18 g/t gold in the indicated category and 1,497,000 ounces of gold grading 0.79 g/t gold in the inferred category at a 0.3 g/t cut-off that is hosted in three deposits (Table 1).
At a 0.5 g/t cut-off, the resource inventory is 465,000 ounces grading 1.40 g/t gold in the indicated category and 1,212,000 ounces grading 0.97 g/t gold in the inferred category (Table 2).
For More Information Brazilian Gold Coproration Joanne Yan, President and Director Renmark Financial Communications Inc. Some statements in this news release contain forward-looking information, including without limitation statements as to planned expenditures and exploration programs. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include without limitation the completion of planned expenditures, the ability to complete exploration programs on schedule and the success of exploration programs. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or the accuracy of this news release.
Source: Brazilian Gold Corp. http://www.braziliangold.ca/corporate/press-releases/20120925-1.html
Disclosure: Brazilian Gold Corp. is a Vulture Bargain Candidate of Interest (VBCI). Members of the GGR team may hold long positions in BGC.V. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Richard W. Fisher - Remarks before the Harvard Club of New York City Posted: 25 Sep 2012 07:42 AM PDT Too important not to share. Comments by Richard Fisher to the Harvard Club of New York City on Monetary Policy (With Reference to Tommy Tune, Nicole Parent, the FOMC, Velcro, Drunken Sailors and Congress). Thank you, Nicole [Parent]. And thanks to the Harvard Club of New York for including me in your speaker series. It is quite something to see one's picture on the cover of the Harvard Club of New York Bulletin wedged between that of Tommy Tune and Nina Khrushcheva, Nikita Khrushchev's great-granddaughter. My wife Nancy and I celebrated our 39th anniversary on Sept. 8. Knowing that she has seen and loved everything our fellow Texan Tommy Tune has ever done on the musical stage, and having grown up with the image of Nikita Khrushchev as First Secretary of the Communist Party of the Soviet Union banging his shoe on the podium of the United Nations and saying, "We will bury you!" I thought I would impress her that evening by showing her the Bulletin. "In your wildest dreams," I asked her, "did you ever think that the skinny, long-haired boy you married 39 years ago would be headlining a speaker series alongside Tommy Tune and Nikita Khrushchev's great-granddaughter?" Her answer was classic: "Richard, we have been married for four decades. I hate to disappoint you sweetheart, but you don't appear in my wildest dreams." A Word About Nicole Parent I am here to speak to you about monetary policy. But before I start, I am going to take advantage of your undivided attention to announce to all assembled here tonight that the former president of this club and my fellow Harvard Overseer, Nicole Parent, is engaged to be married. Nicole, may your marriage last at least 39 years and may you be blessed with the wildest of dreams and the best of life. A Different Perspective In addition to the Algonquin, there are two iconic buildings on this side of West 44th Street. One is the New York Yacht Club; the other is the Harvard Club. I mention this because the close proximity of these two buildings suggests something of a biographical metaphor. I spent four years at a Naval Academy prep school before becoming a midshipman in 1967 at Annapolis, where I majored in engineering and learned the craft of seamanship and naval warfare. Then, in 1969, Harvard kindly recruited me in as a transfer student. Two years later, I graduated with a degree in economics. In thinking through many of the policy issues that confront me as a member of the Federal Open Market Committee (FOMC), I tend to combine both backgrounds, as well as an orientation framed by having an MBA and spending a significant portion of my career as a banker and market operator. My perspective is thus framed from the viewpoint of an engineer, an MBA and a former market operator—not as a PhD economist. For most economic theoreticians, hundreds of billions, or even trillions, of dollars are inputs into a dynamic stochastic general equilibrium model and other econometric equations. To a banker, businessperson or market operator, these are real dollars that have to be thought of within the framework of a transmission mechanism that needs to get the money from its origin at the Fed into the real economy with maximum efficacy. My focus tends toward the practicable—how to harness theory to devise a workable solution to the problems that confront a central banker. There are many superb PhD theorists among the 19 members of the FOMC and support staff. There are only a handful of us—four, to be exact—who have worked as bankers or in the financial markets. Tonight, I am going to provide my take on the FOMC's most recent decision to embark on a new round of quantitative easing focused on mortgage-backed securities (MBS). Given my background, and the fact that the Navy is once again welcome back in Harvard Yard, I'll ask your forbearance if I use some seafaring references.[1] As the book kindly cited by Nicole says, I am given to providing the "straight skinny."[2] I am a Texan. I speak bluntly and directly. I am not given to circumlocution, and I checked diplomacy at the door when I gave up my post as an ambassador and trade negotiator. Please don't take offense and please bear in mind that my comments this evening are mine alone; I do not claim to speak for anybody else in the Federal Reserve System. I shall start my remarks with what I argued at last week's FOMC meeting, then finish with some comments on the outcome of that meeting and what needs to be done next. The Recent FOMC Meeting It will come as no surprise to those who know me that I did not argue in favor of additional monetary accommodation during our meetings last week. I have repeatedly made it clear, in internal FOMC deliberations and in public speeches, that I believe that with each program we undertake to venture further in that direction, we are sailing deeper into uncharted waters. We are blessed at the Fed with sophisticated econometric models and superb analysts. We can easily conjure up plausible theories as to what we will do when it comes to our next tack or eventually reversing course. The truth, however, is that nobody on the committee, nor on our staffs at the Board of Governors and the 12 Banks, really knows what is holding back the economy. Nobody really knows what will work to get the economy back on course. And nobody—in fact, no central bank anywhere on the planet—has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank—not, at least, the Federal Reserve—has ever been on this cruise before. This much we do know: Our engine room is already flush with $1.6 trillion in excess private bank reserves owned by the banking sector and held by the 12 Federal Reserve Banks. Trillions more are sitting on the sidelines in corporate coffers. On top of all that, a significant amount of underemployed cash—or fuel for investment—is burning a hole in the pockets of money market funds and other nondepository financial operators. This begs the question: Why would the Fed provision to shovel billions in additional liquidity into the economy's boiler when so much is presently lying fallow? Great battles at sea are fought with modern analytical tools and the most sophisticated IT and advanced weaponry available. Fleet commanders, like central bankers, use every bit of the intelligence, technology and theory at their command. But ultimately, just as with great engagements at sea, the decisive factor is judgment. In forming their judgments, fleet commanders rely upon briefings from their senior officer corps on the elements, on the conditions at hand and on their tactical and strategic recommendations before deciding on the proper course of action. As you all know, the Federal Reserve's mission is mandated by the Congress. It calls for us to steer a monetary course according to a dual mandate—we are charged with maintaining price stability while conducting policy so as to best assist in achieving full employment. Most all of the FOMC members—the senior officer corps of the Federal Reserve fleet—have surveyed the horizon from their different watch stations and agree that inflation is not an immediately foreseeable threat. Over the past week, however, there has been a noticeable increase in the longer-term inflation expectations inferred from bond yields. These inferences can be volatile and are not always reliable, but a sustained increase would suggest incipient doubts about our commitment to the Bernanke Doctrine of sailing on a course consistent with 2 percent long-term inflation. I believe that even the slightest deviation from this course could induce some debilitating mal de mer in the markets. Charting a Course to Full Employment with Businesses at 'Sixes and Sevens' In the current tumultuous economic sea, facing strong headwinds common in the aftermath of financial crises and balance-sheet recessions, our desired port is increased employment. Certain theories and various hypothetical studies and models tell us that flooding the markets with copious amounts of cheap, plentiful liquidity will lift final demand, both through the "wealth effect" channel and by directly stimulating businesses to expand and hire. And yet from the perspective of my watch station—as I have reported time and again—the very people we wish to stoke consumption and final demand by creating jobs and expanding business fixed investment are not responding to our policy initiatives as well as theory might suggest. Surveys of small and medium-size businesses, the wellsprings of job creation, are telling us that nine out of 10 of those businesses are either not interested in borrowing or have no problem accessing cheap financing if they want it. The National Federation of Independent Business (NFIB), for example, makes clear that monetary policy is not on its members' radar screen of concerns, except that it raises fear among some of future inflationary consequences; the principal concern of the randomly sampled small businesses surveyed by the NFIB is with regulatory and fiscal uncertainty.[3] This is not terribly difficult to understand: If you are a small business, especially, and not only if you operate as an S corporation or as a limited liability company, you are stymied by not knowing what your tax rate will be in future years, or how you should cost out the social overhead of your employees or how you should budget for the proliferation of regulations flowing from Washington. With regard to business fixed investment and job-creating capital expenditures (capex), the math is pretty straightforward: Big businesses dominate that theater. Most all of these businesses have abundant cash reserves or access to money, many at negative real interest rates. I have repeatedly reported to the committee that the CEOs I personally survey will simply not be motivated by further interest rate cuts to invest domestically—beyond their maintenance needs—in job-creating capex. In preparing for this last FOMC meeting, I specifically asked my corporate interlocutors the following question: "If your costs of borrowing were to decrease by 25 or more basis points, would this induce you to spend more on job-creating expansion?" The answer from nine out of 10 was "No." The responses of those I surveyed are best summarized by the comments of one of the most highly respected CEOs in the country: "We are in 'stall mode,' stuck like Velcro, until the fog of uncertainty surrounding fiscal policy and the debacle in Europe lifts. In the meantime, anything further monetary accommodation induces in the form of cheaper capital will go to buying back our stock." This is not an insignificant sounding, coming as it did from the CEO of a company that has the capacity to spend upward of $15 billion on capex. To be sure, buying in stock will have a positive wealth effect on that company's shareholders, but putting the equivalent amount of money to work in spending on plant and equipment would put more people back to work more quickly. Another CEO of a large corporation provided me with an additional source of uncertainty. In this CEO's words, China "may be transitioning toward becoming the caboose of the global economy rather than its engine." This may be a tad bit hyperbolic, but it indicates there is growing uncertainty about the great emerging economy that was once considered an eternal fountain of future demand. With the disaster that our nation's fiscal policy has become and with uncertainty prevailing over the economic condition of both Europe and China and the prospects for final demand growth here at home, it is no small wonder that businesses are at sixes and sevens in committing to expansion of the kind we need to propel job creation. The Duke University Survey My assessment of the efficacy of further monetary accommodation in encouraging job-creating investment among operating businesses was recently confirmed by a more rigorous analysis in the Global Business Outlook Survey of chief financial officers by the Fuqua School of Business at Duke University—the Harvard of the South—in September.[4] Of the 887 CFOs surveyed, only 129, or 14.5 percent, listed "credit markets/interest rates" among the top three concerns facing their corporations. In contrast, 43 percent listed consumer demand and 41 percent cited federal government policies. Ranking third on their list was price pressures from competitors (thus affirming most hawks' sense that inflationary pressure is presently sedentary); fourth was global financial instability. The analysts at Duke summarized their findings as follows: "CFOs believe that a monetary action would not be particularly effective. Ninety-one percent of firms say that they would not change their investment plans even if interest rates dropped by 1 percent, and 84 percent say that they would not change investment plans if interest rates dropped by 2 percent." Citing the Evidence of the Unsophisticated and the Sophisticates Alike Citing these observations, I suggested last week that the committee might consider the efficacy of further monetary accommodation. When I raised this point inside the Fed and in public speeches, some suggested that perhaps my corporate contacts were "not sophisticated" in the workings of monetary policy and could not see the whole picture from their vantage point. True. But final demand does not spring from thin air. "Sophisticated" or not, these business operators are the target of our policy initiatives: You cannot have consumption and growth in final demand without income growth; you cannot grow income without job creation; you cannot create jobs unless those who have the capacity to hire people—private sector employers—go out and hire. In the period between the August FOMC meeting and the meeting last week, some very prominent academic and policy sophisticates also questioned the efficacy of large-scale asset purchases. Among them were Michael Woodford of Columbia University—a former colleague of Ben Bernanke's when they were at Princeton—and Bill White of the Organization for Economic Cooperation and Development and formerly of the Bank for International Settlements, and others. Like me, Professor Woodford argues that the economy would not benefit from additional liquidity. Like me, he argues that large-scale asset purchases and maturity-extension programs like Operation Twist are unlikely to appreciably stimulate private borrowing activity through portfolio-balance or term-premium effects.[5] And as for Bill White—a globally respected economist who stood up to convention and predicted in 2003 that policies being pursued at the time would engender the financial crisis of 2008–09—here is what he wrote in a particularly thought-provoking paper a week before the Fed's annual symposium last month at Jackson Hole, Wyo.:[6]
I do not necessarily agree with all of either Woodford's or White's arguments, but in light of my soundings of unsophisticates and sophisticates alike, I felt an urge at the meeting last week to tie the chairman to the mast, Odyssean-style, and to stuff wax in the ears of my fellow committee members, in order to resist the Siren call of further large-scale asset purchases. But I have no such powers. I am only one officer in the loyal crew that sails under the command of Admiral Bernanke. My reports were given a fair hearing. But neither they, nor the arguments of others who questioned the need to provide further accommodation, carried the day, and a decision was made. Having weighed the various tactical and strategic arguments of his officer corps, our helmsman decided to call down to the engine room and request that more coal be shoveled into the economy's boilers. It was decided that further accommodation would be required in the form of mortgage-backed securities purchases of $40 billion per month and that Operation Twist and the reinvestment of principal payments from our current holdings of agency debt and MBS would be maintained: A total of $85 billion a month in additional accommodation would be added to the system at least through the end of the year. For added measure, the committee announced that if the outlook for employment does not improve "substantially," it "will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved." As it always does, the FOMC noted that it will "take appropriate account of the likely efficacy and costs of such purchases."[7] A Fair Assessment and a Prayer Even though I am skeptical about the efficacy of large-scale asset purchases, I understand the logic of concentrating on MBS. The program could help offset some of the drag from higher government-sponsored entities' fees that have been recently levied, will likely lower the spreads between MBS and Treasuries and should put further juice behind the housing market—one of three durable-goods sectors that is assisting the recovery and yet is operating well below long-run potential (the other two sectors are aircraft and automobiles). The general effects of inducing more refinancing may aid housing and households in other ways. Lower mortgage rates could help improve the discretionary spending power of some homeowners. Underwater homeowners might have added incentive to continue meeting mortgage payments, spurring demand and preventing underwater mortgages from sinking the emerging housing recovery. Of course, much depends on the transmission mechanism for mortgages, as my colleague Bill Dudley spoke about yesterday. Despite my doubts about its efficacy, I pray this latest initiative will work. Since the announcement, interest rates on 30-year mortgage commitments have fallen about one-quarter percentage point—about what I had expected—so, so far, so good. Our Dysfunctional Congress and Drunken Sailors I would point out to those who reacted with some invective to the committee's decision, especially those from political corners, that it was the Congress that gave the Fed its dual mandate. That very same Congress is doing nothing to motivate business to expand and put people back to work. Our operating charter calls for us to conduct policy aimed at achieving full employment in addition to preserving price stability. A future Congress might restrict us to a single mandate—like other central banks in the world operate under—focused solely on price stability. But unless or until that is done, we have to deliver on what the American people, as conveyed by their elected representatives, expect of us. One of the most important lessons learned during the economic recovery is that there is a limit to what monetary policy alone can achieve. The responsibility for stimulating economic growth must be shared with fiscal policy. Ironically, and sadly, Congress is doing nothing to incent job creators to use the copious liquidity the Federal Reserve has provided. Indeed, it is doing everything to discourage job creation. Small wonder that the respondents to my own inquires and the NFIB and Duke University surveys are in "stall" or "Velcro" mode. The FOMC is doing everything it can to encourage the U.S. economy to steam forward. When we meet, we consider views that range from the most cautious perspectives on policy, such as my own, to the more accommodative recommendations of the well-known "doves" on the committee. We debate our different perspectives in the best tradition of civil discourse. Then, having vetted all points of view, we make a decision and act. If only the fiscal authorities could do the same! Instead, they fight, bicker and do nothing but sail about aimlessly, debauching the nation's income statement and balance sheet with spending programs they never figure out how to finance. I am tempted to draw upon the hackneyed comparison that likens our dissolute Congress to drunken sailors. But patriots among you might take umbrage, noting that a comparison with Congress in this case might be deemed an insult to drunken sailors. The Plea of the Navy Hymn and 'Illegitimum Non Carborundum' If you want to save our nation from financial disaster, may I suggest that rather than blame the Fed for being hyperactive, you devote your energy to getting our nation's fiscal authorities to do their job. Since 1879, every chapel service at the Naval Academy concludes with a hymn that contains the following plea: "O hear us when we cry for Thee, for those in peril on the sea." We cry for a nation that is in peril on the blustery seas of the economy. Our people are drowning in unemployment; our government is drowning in debt. You—the citizens and voters sitting in this room and elsewhere—are ultimately in command of the fleet that sails under the flag of the United States Congress. Demand that it performs its duty. Just recently, in a hearing before the Senate, your senator and my Harvard classmate, Chuck Schumer, told Chairman Bernanke, "You are the only game in town." I thought the chairman showed admirable restraint in his response. I would have immediately answered, "No, senator, you and your colleagues are the only game in town. For you and your colleagues, Democrat and Republican alike, have encumbered our nation with debt, sold our children down the river and sorely failed our nation. Sober up. Get your act together. Illegitimum non carborundum; get on with it. Sacrifice your political ambition for the good of our country—for the good of our children and grandchildren. For unless you do so, all the monetary policy accommodation the Federal Reserve can muster will be for naught." But, then again, I am not Ben Bernanke. And I imagine that after listening to me this evening, you might be grateful I am not. Now, in the great tradition of central banking, I will do my utmost to provide you with the "straight skinny" and avoid answering any questions you might have. Thank you. Source: Dallas Federal Reserve (Footnotes at bottom in the link below.) Thanks to our friend Dennis Gartman for calling attention to Mr. Fisher's speech. We consider Mr. Fisher's remarks worthy of sharing widely among thoughtful people. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk Of October Correction In Gold and Silver As Seasonally Weak Posted: 25 Sep 2012 07:34 AM PDT gold.ie | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold and the harsh realities of a 42 year old currency experiment Posted: 25 Sep 2012 07:24 AM PDT Gold and the harsh realities of a 42 year old currency experiment Julian Philips argues that the concept of a currency as a measure of value has now departed completely. Author: Julian Philips Posted: Tuesday , 25 Sep 2012 JOHANNESBURG (Gold Forecaster) - In 1971 President Nixon closed the window that allowed U.S. dollars to be sold for gold owned by the U.S. Just before that, the price of gold was $35 an ounce. Since then gold has been called a 'barbarous relic', a term used by Keynes, the famous economist. From that time on, the world's currencies stood merely on the confidence their governments engendered and the control they exercised over international financial dealings of all kinds. That confidence lasted until 2007 when the credit crunch brought government financing on both sides of the Atlantic into question. Up until now the performance of the underlying value of currencies has hidden these questions as exchange rates are adequately 'managed' through swap arrangements to stabilize exchange rate movements to the extent that violent moves don't happen. But the real value of currencies in terms of their real solvency is now a matter of open debate. As of now, relative to the amount of gold available to markets, the price of gold is the only measure of value that currencies can be held to. We look at that and look at the conditions that are determining the value of currencies now and in the future. The Currency Experiment When Nixon closed the 'gold window' to European governments in 1971 he relied on the oil producers of the world to price oil in U.S. dollars only. This made the USD a necessity. Except for the few oil producers who refine their own oil, every country needs to import oil after using the U.S. dollar to buy it. This gave the U.S. the control they needed over currency markets, to ensure that the dollar became and remained the sole global reserve currency until now. A look at the euro, which -although the world's largest trading bloc- shows that if a currency is measured solely on the performance of its government and Balance of Payments, it remains vulnerable to market forces that react to that measurement. With oil in backup, that vulnerability fades. That is, until profligate printing of that government's currency becomes so obvious that it cannot be ignored. This is where the U.S. dollar is coming to now. The 'currency experiment' has persisted for 41 years, but for the last five, it has faltered and continues to do so. With the focus on the short-term, the real consequences of that experiment have been largely ignored. It's time to take a more distant view of what has happened so that we can get a balanced perspective of its cost. Value of Paper Money - The Harsh Reality During the 42 years of the currency experiment with no gold or silver standing behind currencies we have seen the gold price multiply from $35 to $1,770. That's over 50 times in 42 years. And there's still much more to come it seems, with the assistance of governments. If one was fortunate to get out at anywhere above $800 back in the eighties and back in at $300 in the next twenty years that number goes up to 64 times $35. That's what solid long-term funds should have done, to maximize profits. (It is far better than trading and far less nerve-racking.) But don't look at that as a profit figure. That's not the point we are making here. Look at it as a statement on the failure of the currency experiment and currencies' ability to measure value. Now translate that into the value of savings over that period -a harsh reality indeed! Pension Funds A Pension fund is measured on the money flowing in and less the money flowing out. The assets in the middle should be rising to cover the additional costs of paying pensions when the workers retire and the cost of living increases. That's why they depend on Pension Fund Managers and Pensions. If the money leaving is more than that coming in, then the fund is moving to insolvency. As Alan Greenspan pointed out so strongly, this is happening now and with 'baby boomers' retiring now, that is the current situation in most Pension Funds (such as is now reported about the Chicago Teachers). The future of such Pensioners even now as well as the Pensions of those working now looks bleak. If you strip out the causes of higher prices that are due to supply and demand factors (which usually readjust over time) then you are left with monetary inflation. A rate of monetary inflation of 2.5% has been deemed acceptable because it is manageable and gives the impression of growth. Today's quantitative easing in the U.S., Europe, Japan and China has now accelerated to a much faster pace in the hopes of stimulating faster, sustainable growth. QE1 and QE2 may have staved off a depression, but they have not translated into sustainable growth. We are all now waiting to see if QE3 will do so. We've all become aware that money printing lowers the value of a currency; however, the benefits of increased liquidity in the system -it is hoped- will compensate for that. Savers are the victims of such a policy, if they save those currencies even when growth is resuscitated. Some savvy enough may turn to currencies, which they believe will not be devalued in the same way and retain their value, i.e. Yen or Swiss Franc. But for the last year or so, both the Swiss and Japanese governments have interfered in the market place to lower the value of their currencies internationally, so they can retain their international trade competitive levels. The Yen is still being treated as a 'safe-haven' currency even though the Bank of Japan has made it clear that it will engineer a weaker Yen for a long time to come. The same is true of the Swiss Franc, both countries placing their export competitiveness above the value of their currencies. We can therefore state: The concept of a currency as a measure of value has now departed completely. Such currency market changes leave room for gold and silver to act as that measure of value, as currencies fall against them. Look again at the price of gold before 1970 and now. It translates into a 100%+ gain every single year for the last 41 years. (So much for an item you dig up, then put back in the ground.) But this is a measure of decline in currency value over that same period! The culture that precipitated this history is still in control and certainly intends to continue down that road. Some commentators believe that the gold price can triple in the next few years. That would change the rise from $35 until then to 317% per annum since before the 1970's. What will that tell you about the value of currencies the world over? And what does that point to in the future? Julian Philips is the founder of www.GoldForecaster.com and www.SilverForecaster.com http://www.mineweb.com/mineweb/view/...ail&id=110649 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Silver Update: Silver Substitutes 9.24.12 Posted: 25 Sep 2012 06:10 AM PDT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quadrillion Dollar Derivatives Market 20 Times Global GDP Posted: 25 Sep 2012 06:05 AM PDT Markus Stanley: Derivative bets not a zero sum game, have far reaching real world consequences from therealnews: ~TVR | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risk of October Correction in Gold and Silver Posted: 25 Sep 2012 05:41 AM PDT Gold edged up today, on investor expectations for continued strength in the yellow metal linked to recent "stimulus" packages employed by central banks globally. With all major central banks now engaged in some form of QE, we now have "QE Everywhere." | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bullion Prices 'Should Break Higher After Consolidation' Posted: 25 Sep 2012 05:13 AM PDT Spot market gold bullion prices traded around $1,765 an ounce Tuesday morning in London, 1.8% off last Friday's seven-month high. Stock markets were also broadly flat as major government bond prices gained, while the euro recovered early losses. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Daily and Silver Weekly Charts – End of Quarter Posted: 25 Sep 2012 04:54 AM PDT
from jessescrossroadscafe.blogspot.ca: This week is the end of the third quarter. Those holding the big short in the metals might strive to keep the price down to make their 'mark to market' look less daunting. Stocks may find a bit of a floor 'unless something happens.' The fundamentals for gold look formidable. The long lull of summer may be coming to an end. Keep on reading @ jessescrossroadscafe.blogspot.ca | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Turk – There Is A War Going On In The Gold & Silver Markets Posted: 25 Sep 2012 04:48 AM PDT
from kingworldnews.com: Today James Turk told King World News there is a fierce battle taking place between the bulls and bears in the gold and silver markets. But Turk noted, "… the uptrend shows the physical buyers of gold and silver gaining the upper hand, while the shorts and central planners are losing this war." Here is what Turk had to say: "It's a real battleground out there, Eric. It started at the beginning of last week when gold was looking like it would break through $1780 while silver was already climbing through $35. But then the shorts started throwing everything they could at that price advance and stopped both precious metals." Keep on reading @ kingworldnews.com | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Art Heist – DoubleLine Fund Manager Jeffrey Gundlach Robbed by the Hard Asset Focused Posted: 25 Sep 2012 04:46 AM PDT
from wealthcycles.com: We all know hard assets, and not paper, are the place to save when a monetary system, such as our own today, ages to that state where the frequency of printing equates to constant-flow feeding-tube status. Art, wine, guns, rare cars and jewelry have long been mediums of preserving wealth for those with their more readily tradeable gold and silver money already stashed away. It appears Jeffrey Gundlach, founder and fund manager of DoubleLine Capital, has his precious metals stowned out of sight because the $20+ million in hard assets recently stolen from his Santa Monica home only included a small amount of money, none of it bullion. Four of the five other types of hard assets were involved; only Gundlach's newish Porsche, among the items stolen, would not really qualify as a hard asset collected for preservation of value, although it may end up better off than the dollar. Keep on reading @ wealthcycles.com | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Open-ended Rally in Gold, Silver and Stocks? Posted: 25 Sep 2012 04:44 AM PDT
from news.goldseek.com: There was plenty of hoopla last week. The Federal Reserve's announcement Thursday of a third round of quantitative easing sent investors scrambling for gold and silver. The Fed injected a liquidity fix by announcing the purchase of an additional $40 billion per month in mortgage-backed securities, increasing its holdings of longer-term securities by about $85 million each month through the end of the year, as well as keeping interest rates "exceptionally low" until 2015. In a race to debase the Bank of Japan joined the party this week announcing an asset buying program intended to stimulate spending. This month, European Central Bank President Mario Draghi gave details on a plan to buy debt of member states, while China approved infrastructure spending. As Milton Friedman once said, "Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless." Keep on reading @ news.goldseek.com | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bernanke Declares War on Canadian Economy (Rest of the World Too) Posted: 25 Sep 2012 04:40 AM PDT
from globaleconomicanalysis.blogspot.ca: The financial world cheered when Bernanke announced QE3 until it works (which is essentially forever, because it never will work). Bruce Stewart, writing for the Winnipeg Free Press, is one of few who figured out QE for what it really is: A Beggar-Thy-Neighbor competitive currency debasement policy hoping to sink the US dollar. Not that QE would work anyway, but one problem for Bernanke, is most of the rest of the world is doing the same thing. Keep on reading @ globaleconomicanalysis.blogspot.ca | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Don’t Miss the Big Show in Silver Posted: 25 Sep 2012 04:09 AM PDT Silver gives you additional diversification into the precious metals space with that extra bit of spice on the volatility side. It is nothing less than owning gold with a turbocharger. Silver gives you a nice double play. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold replaces coca for Colombian mafia Posted: 25 Sep 2012 03:46 AM PDT Illegal mining, with serious environmental consequences, has replaced coca cultivation as the main source of income for the Colombian mafia. Millions have been thrown out of their homes as a result... Read | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 25 Sep 2012 03:36 AM PDT We see selling this week and are watching some key support levels. As of September 20. Dow Jones Industrial Average: Closed at 13,596.93 +18.97 with price above all moving averages. Volume was normal and momentum has turned mildly up. Price hit a top trend line and has now gone sideways in a choppy trading channel. While the markets seem toppy and struggle to go higher, we see a selling cycle on the technicals for next week. The standard technical ABC toppy correction is now completed. Today is wave one up in a smallish move that did close near the highs. For Friday trading tomorrow, we can see more sideways action with perhaps a flat to down move ending the week. One of our early warning systems, the Nasdaq 100 index was flat to down today and this signal tells us the selling could start either later tomorrow or next Monday morning. Resistance is 13,600 and support is 13,500. If 13,500 breaks down on a pullback next week, the next support is 13,354 on the 20-day moving average. S&P 500 Index: Closed at 1460.26 -0.79 on normal volume and a tiny momentum up-move. The price of 1450 is major support and if we sell mildly tomorrow, this is the number for a forecast Friday close. Like most of the stock indexes, this one is acting toppy, as the new wave one fell below the standard ABC pattern but then it popped up to close near the high for the day. I am not sure where that support came from except perhaps some traders are expecting more buying overnight from overseas and want to stay in the trade. The price of 1450 is major support and 1465 is resistance. Our forecast is for smallish moves on Friday. Traders might go long mid-session and then close down on support at 1450 for the weekend. If this is the case, Monday should begin to sell in earnest. S&P 100 Index: Closed at 672.65 +0.27 on normal volume and mildly rising momentum. Resistance is 675.00 and support 665. The chart is showing hard resistance against 675 with five days of trading just under it but not above it. Keep in mind these are big companies and they move slowly. It is difficult to see how 675 can be broken with a new rally. Yes, the price is above all moving averages but as we mentioned in our report "Markets are very Toppy," in our view we have reached the highs for this cycle. We expect determined buying to keep these stock market indexes in levitation to prevent a pre-election crash. Traders will take a September-October 12-15% correction knowing full well they can pump stocks after November 6 to gain the maximum upside for bonuses. What they will not accept, if they can stop it, is a selling event much more severe like -23% or something worse. Close support is 665.00 and 660.11 on the 20-day moving average. Expect a flat market on Friday. Nasdaq 100 Index: Closed at 2861.70 -2.33 on 110% of normal volume and flat and toppy momentum mostly on Oracle shares selling-off. I would call this index at a top as it appears to be preparing to begin our forecast selling on our technical work. The correction is not expected to be extreme, but we do see a correction with potential to find lower support at 2808 first and then lower to 2750-2743. If the projected sell-off was stronger, next lower support would be 2650-2600. The stronger nearby support is 2800 matching a former higher price produced back in March-April, 2012. A drop of 250-300 points for our fall highs would not be a crash and could be called expected and normal. Expect the price to be flat to down on Friday with little price movement in either direction. 30-Year Bonds: Closed at 145.93 -0.51 after bouncing off the 200-day average low as we did forecast. Momentum is still falling but trying to support. The price of 145.00-146.50 is the new trading range. Bonds are now oversold on the rising Euro currency and belief that credit things have improved in Europe. They have not improved but merely paused on media talk instilling some hope for bond traders. The 200-day average is 144.84 and that price should hold-up for at least a few more days. With stocks preparing to top-out and sell-off mildly, we can expect the bonds to rise to the 20-day average first at 147.51 and then touch the 50-day average at 147.50-148.33 resistance. Look for sideways trading with selling bias staying in place until stocks completely turn-over for the new selling cycle. Gold: Closed at 1768.50 -1.60 as after hours trading on Thursday evening for December futures has stabilized at 1775.60, up +$5.40. We have some old toppy resistance on 1796.50 back in March that can resist on the next rally. Fundamentals are in place for new powerful rallies on QE-3 to infinity. The calendar, cycles, election and PPT would prefer no runaway rallies in gold. They will accept a new move to $1923 without any major interference in my view. However, above that higher price in a rally to $2,000 we could expect some price suppression from manipulators. Last year near our current date we experienced a drop of nearly -250.00. Could this happen again? I don't think so but next week begins the convergence of several moving averages and cycles in numerous markets. This is usually disruptive and we have to be ready for it. Fundamentally, gold is long and strong. On the cycles and time we expect a minor technical correction to begin at 1785-1795 over the next few days. Silver: Closed at 34.64 +0.05 on peaking momentum and touching several resisting price points near 35.00 in 3-4 spots on previous months. Last year on this date silver dropped -12.50 from 42.50 to 30.00. The chart pattern is now set-up for a selling event. There is 20-day moving average support at 32.80 with a lower number nearby at 32.48. We would expect the price to touch 32.48 as a minimum move over the next few days. Keep in mind silver moves very fast in both directions. However, when it sells it drops faster than in a rally. This will immediately affect related silver companies shares. Take the proper risk precautions and risk control on your trades and investments. For Friday look for a flat to down market with a potential drop of $.50 to $1.50 or possibly even more. XAU: Closed at 193.50 -1.37 on rising momentum and a peaking metal to shares ratio signaling a top is either in place or very near. The chart pattern had a stronger than normal ABC look to the upside but today's trading range was short and went negative at the close. Also that ratio is very accurate and predictive. Today it is showing a distinct peak and drop. Support is 190 and resistance is 195.00. We have achieved a normal rally retracement and then exceeded those numbers. Should the broader stock markets have only a mild selling event and the physical metals hold to the current trading range, the XAU would support and not sell-off that much overall. However, it best to be careful and get your most vulnerable trades out of the way as they cannot be sold into a selling event. You must exit those shares on strength. This market is now going flat to mildly down. US Dollar: Closed at 79.42 +0.32 finding some base and strength to stop the selling after dropping from 84.00 in June and then supporting a few days ago at 78.75. Previously, the dollar was overbought and the Euro currency oversold. They switched roles but the latest prices signal they have stabilized near the current numbers. Sometime this fall, we are expecting a negative credit event in Europe. If it is severe enough and the central bankers cannot persuade the herd they can cover, the selling in the Euro currency and related bonds could be severe. Should this happen, it would probably occur after the November 6 election. However, another escalating problem is the trauma between Israel and Iran. Should something break out on this news, oil and gold would skyrocket, stocks would sell-off and the dollar would rise as the go-to-currency safe haven. Some observers think the dollar falls on a rising Yuan, or Yen in Asia. I sincerely doubt that as the dollar is still the reserve currency for 77% of the world. Is the dollar inflated and weak? Yes, it is but it's still the best option compared to others. Look for more dollar buying over the next few days with a mildly selling Euro. Dollar resistance is 80.00 to 80.27. Crude Oil: Closed at 92.90 +0.86 on peaked and selling momentum. However, just this week China intervened to support base metals and oil. Price fell under all moving averages but 92.50 is now stronger support. If 92.50 can hold, oil should trade between 92.50 and 96.50 for Friday. Last year at this time we saw an oil selling event taking down the price from 90.00 to about 75-76.00. This can happen again and we are on a new set-up for selling. On the other hand, the big funds are long energy and other commodities. The reserves are very high world-wide but we think this is so as buyers fear inflationary higher prices and the potential for Middle Eastern trouble. So there are some off-setting fundamentals. When this happens in markets the prices go sideways into trading chop. This is where are now unless some other event says sell oil like a very bad commercial sales forecast drop. I think not this time as china stepped in to buy energy. Expect flat to higher prices for crude oil on Friday. CRB: Closed at 306.93 -1.48 on toppy momentum with moving averages crossing over to sell primarily on crude oil, which is 50% of this trading index. The price is sitting in the middle of all three moving averages and strong support at 300.00, 303.56, 304.45 and the price of 305.00 for nearby support. This trading pattern and all the clustered moving averages, trend lines and prices tell us price is going nowhere for now. It should be stuck in choppy trading unless the bottom drops out of the oil prices. We cannot imagine that but keep in mind oil is sitting on abnormally higher reserves. Gold, silver, grains, base metals and energy are all toppy, and or preparing to sell. While the funds are long this can reverse quickly, especially on the oil prices. Watch oil to see where commodities go next. For Friday, we see a flat to down market that has loads of nearby support. –Traderrog   This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ted Butler Urges JPMorganChase Board Members to Try Transparency in Silver Posted: 25 Sep 2012 03:10 AM PDT ¤ Yesterday in Gold and SilverThe gold price was under pressure right from the 6:00 p.m. New York open on Sunday night...and by shortly before 10:00 a.m. Hong Kong time, gold had hit its Far East low price tick of the day, which was around the $1,658 spot mark. From there, the price recovered a bit, before rolling over again about 9:00 am. in London, with the absolute low of the day [around $1,755 spot] coming just minutes after 11:00 a.m. BST. The subsequent rally took gold to its New York high which came just minutes before the 4:00 p.m. BST close in London...11:00 a.m. in New York. The gold price didn't do a whole heck of a lot after that. Gold closed at $1,764.50 spot...down $8.50 on the day. Net volume was very heavy at 178,000 contracts, a big chunk of which were traded before the Hong Kong lunch hour, as volume was pretty heavy in early Far East trading.
Silver's price path was very similar, except for the 75 cent air pocket it hit at 10:00 a.m. Hong Kong time. Nick Laird sent me the 1-minute tick chart on silver for the time period in question...and it took five minutes from start to finish. The high-frequency traders did their thing as the market went 'no bid'. Here's the chart for gold, as well as silver.
The 11:00 a.m. time on the graph is the local time at Nick's location on the East coast of Australia...and I thank him for this chart on your behalf. The 'click to enlarge' feature really helps here. After that crucifixion, silver rallied back to the $34.00 spot price...and traded within two bits of that price for the rest of the day. Silver closed at $33.97 spot...down 55 cents. Net volume was around 50,000 contracts, with 20 percent of that occurring before lunch was over in Hong Kong.
The dollar index spiked down 25 basis points at the open, but recovered almost immediately...and I suspect that it was a data feed error rather than a true price move. The index rallied in fits and starts up until about 9:45 a.m. in London...and from there it traded mostly sideways until shortly after 10:00 a.m. in New York. From that point it went into a slow decline for the rest of the day...and by the 5:30 p.m. Eastern close, the dollar index was down to 79.54, but up 15 basis points from Friday's close. I think it's fair to say that there was no co-relation between the dollar index and the precious metal price action on Monday.
The HUI gapped down...and stayed down for the rest of the day...closing right on its low, down 3.14%.
The silver stocks got hit even harder...and Nick Laird's Silver Sentiment Index closed down 3.95%.
(Click on image to enlarge) Well, the CME's Daily Delivery Report for Monday coughed up the last of the big holdouts in the September delivery month for silver. Last week it was Deutsche Bank coming clean...and yesterday it was Jefferies as the big short/issuer with 231 out of 240 silver contracts posted for delivery within the Comex-approved depositories on Wednesday. There was a fairly long list of stoppers, but taking the lion's share, as usual, was JPMorgan and the Bank of Nova Scotia...with Jefferies a distant third. The Issuers and Stoppers Report is worth a look...and the link is here. By the way, there were only 2 gold contracts posted for delivery in yesterday's report. It was a busy day in both the GLD and SLV ETFs on Monday. Gold continued to pour into GLD...and yesterday they took in another big chunk...290,833 troy ounces to be precise. Since September 1st, authorized participants have deposited 1.2 million ounces of gold in GLD. That's a lot! The fork lifts were busy over at the SLV vaults as well, as they reported receiving 2,422,030 ounces of silver. Since September 1st, there have been about 9.5 million ounces of silver deposited in SLV, so they are getting caught up. The only question remaining is just how much of a short position still remains in SLV...and GLD for that matter. I'm sure lots of those positions are being covered as all this silver and gold has been deposited over the month. But most of that data won't be in the next report from shortsqueeze.com which should be out any evening now...and as soon as it's is posted, it will be in this space in my column the following morning. Over at the Comex-approved depositories on Friday, they reported receiving 616,913 troy ounces of silver...and shipped 618,222 ounces of the stuff out the door. The link to that action is here. Here's another chart from Nick Laird...showing the U.S. M3 money supply.
(Click on image to enlarge) I apologize in advance for the large number of stories in today's column. My attempts at ruthless editing three days worth of stories just didn't pass muster last night, as there are a lot of events worthy of your attention...starting off with the first story, which is a must read JPMorgan is now short over 31 percent of the Comex futures market in silver all by themselves. Deutsche Bank recommends gold...even a gold standard. Ross Norman: QE to insanity and beyond - best for gold lies ahead. Big inflows into SLV and GLD again. JPMorgan short 31% of the Comex futures market in silver. ¤ Critical ReadsSubscribeConrad Black: Canada's front-row seat for the American disasterAs many commentators have opined, Canadians should not become smug because Canada has fared relatively well in the Great Recession since 2008. Canada has been as fortunate as it has been wise, above all in having the United States, rather than more historically aggressive countries, as a neighbour; in having the British as the originating force for Canadian institutions and laws; and in being a treasure house of natural resources. It might even, someday, be seen as an advantage to have a viable French contingent of the population. It would require a preternaturally inept people to misplay this geopolitical hand. It is notorious that most Canadians are to some degree anti-American, though most are also appreciators of America, and this makes the present election in the United States, unfathomably banal though the campaign has been so far, a matter of legitimate comfort to most Canadians. Canada has been to some degree the beneficiary of the self-imposed decline of America these past 15 years. It is a continuing struggle to persuade Canadians that they may safely liberate themselves from the impulse not to aspire to anything more ambitious in the world than to tug at the trouser-leg of the Americans. Canada entrusted its national security entirely to the United States in the 1930s, and through the end of the Cold War, and pulled its weight sometimes, and sometimes not. And the extent of its independence was mainly posturing through the United Nations in the role of peacekeeper. Conrad Black is impossible to describe. More than twenty years ago I paid $50 to go to a luncheon here in Edmonton where he was the keynote speaker. His presence, when he entered the room, was palpable. The assembled multitude didn't know whether to clap or not...and I don't think they did, as I seem to remember that he walked to the podium in total silence. But there was no doubt in anyone's mind that they were in the presence of a great mind. And regardless of his public trials and tribulations over the last number of years, he remains mostly unbowed...and his gigantic intellect, along with his almost equally gigantic ego, remain to this day...although his time spent in the clutches of the American legal/prison system have certainly softened him, as have his advancing years on this planet. This op-ed piece in Saturday's edition of the National Post is to be read slowly, savoured...like one would a $1,000 bottle of wine. I haven't quite made up my mind as to whether or not I would like the guy if I had the opportunity to break bread with him, but I do recognize genius when I see it...and for that reason alone, I respect what he has to say...and so should you. It's an absolute must read, of course...and I thank Roy Stephens for his first offering of the day. The link is here.  Hillary Clinton: Raise Taxes On The Rich EVERYWHEREOne of the issues that I have been preaching about around the world is collecting taxes in an equitable manner — especially from the elites in every country," Secretary of State Hillary Clinton said in her speech at the Clinton Global Initiative Monday. Although Clinton noted that she is "out of politics" domestically, the audience was already chuckling at her clear reference to the debate over tax policy in the presidential contest. "It is a fact that the elites in every country are making money. There are rich people everywhere, and yet they do not contribute to the growth of their own countries," Clinton said. What Clinton meant by "contribute to growth" was revealing. She listed contributing to building schools and hospitals rather than domestic business investment, which is the conventional meaning of contributing to growth. Wow! This woman is totally out of control...and to make matters worse, the word is out that she's probably running for president in 2016. Be very afraid. This CNBC story was picked up the businessinsider.com Internet site yesterday...and is Roy Stephens second offering in a row. The link is here.  More Bank Layoffs Coming: 'Bad as I've Seen It': Meredith WhitneyBanks have been behind the curve in terms of downsizing, with their employees paying for it now through a rash of furloughs, analyst Meredith Whitney told CNBC. The industry has seen a recent spate of big layoff announcements, including 16,000 from alone. Though banks already have jettisoned about half a million workers since the beginning of the financial crisis in 2008, Whitney said more are to come as the shrinking big institutions struggle to compete. This short piece was posted on cnbc.com website just minutes after the closing bell in New York yesterday afternoon...and I thank West Virginia reader Elliot Simon for sending it. The link is here.  Goldman's Not-So-Golden Glow in the Summer of '98After it emerged this month that Goldman Sachs was breaking with 25 years of tradition and no longer extending two-year contracts to college-recruited investment bankers, my mind was immediately transported to the heady summer of 1998. On the bottom tip of Manhattan, where Goldman's footprint sprawled across several buildings, I was one of hundreds of newly hired two-year analysts who roamed the concrete canyons with company-issued ThinkPads and insignia satchels. We were the spawn of a booming stock-market and mergers-and-acquisitions scene that stoked Goldman, then Wall Street's last big partnership, to splurge on undergraduate hires. Whether you were Merrill, the Morgans, Bear, Lehman or even some Jersey City boiler room, you had to staff up big or miss out on the seemingly endless fees and commissions up for grabs. My senior year of college accordingly saw banks -- big, small and never-before-heard-of -- ply us with sushi, fondue and microbrewery rent-outs. Dynamic. Culture. Team. Growth. Value. Vision. Down enough shrimp-tempura rolls and you could almost stomach the McKinseyglish. This very interesting read showed up on the Bloomberg Internet site at 4:30 p.m. Eastern time yesterday afternoon...and I thank Washington state reader S.A. for bringing it to our attention. The link is here.  Fed Williams: QE3 asset purchases may be expandedThe Federal Reserve could expand its stimulus package to include assets other than mortgage-backed securities if the U.S. economy fails to respond to its latest effort to jump-start the economy. "Unlike our past asset-purchase programs, this one doesn't have a preset expiration date," said San Francisco Fed President John Williams at a speech at the City Club on Monday. "Instead, it is explicitly linked to what happens with the economy." At its monetary-policy meeting on Sept. 13, the U.S. central bank said it would buy $40 billion worth of mortgage-backed securities per month as part of a stimulus plan colloquially known as QE3 — for Round 3 of quantitative easing. "We might even expand our purchases to include other assets," he said. One wonders if gold mines might be on the list of "other assets". This marketwatch.com piece was picked up by the finance.yahoo.com Internet site late yesterday afternoon...and I thank reader Scott Pluschau for digging it up on our behalf. The link is here.  Britain's Financial Services Authority demands new legal powers after Libor manipulation scandalThe watchdog has called for "exemplary sanctions" and "forceful punishment" of bankers who are caught breaching regulations to make them an example in an industry where investigating malpractice is difficult. The individuals who set Libor could also come under the regulatory umbrella. The FSA's proposals come as Martin Wheatley, the chief executive-designate of the Financial Conduct Authority, is expected to propose a fundamental overhaul of the way the inter-bank lending rate is set when his government-commissioned review reports this week. This story showed up at the telegraph.co.uk Internet site at 9:30 p.m. BST...4:30 p.m. on the U.S. East coast...and is Donald Sinclair's first story in today's column. The link is here.  Paul Volcker: ring-fencing British banks is not enoughIn an exclusive interview with The Daily Telegraph, Mr Volcker said that plans to force banks in the UK to ring-fence their traditional retail arms from "casino" investment divisions would not work in the event of a bail out. Ring, he said, would only work in "fair-weather" conditions but not when banks were under pressure. "In my experience ring-fencing is not terribly effective," said Mr Volcker. "It only works in fair-weather. But doesn't work in foul weather. They have already run into problems and they are bound to run into more." The criticism comes less than a month after the publication of Sir John Vickers' banking reform proposals. The report, which was aimed at shaking up British banking, opted for ring fencing rather than a complete separation of retail banking from riskier investment banking divisions. The cost of ring-fencing is estimated to be between £4bn-£7bn, but many of its critics question whether it can adequately cordon off retail deposits, which are implicitly guaranteed by the Government. This story was posted on The Tel | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold and Silver Market morning, September 25 2012 Posted: 25 Sep 2012 03:00 AM PDT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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